The October 2023 survey from the University of Michigan (UM) Surveys of Consumers revealed a decrease in the Consumer Sentiment Index, falling to 63.8 from September’s 67.9 but surpassing last October’s 59.9.
The Current Index also experienced a decline, dropping to 70.6 compared to September’s 71.1 but still higher than last October’s 65.6. The Expectations Index followed suit, falling to 59.3 from September’s 65.8, yet remaining above last October’s 56.2.
The overall index of economic news heard by consumers declined by about 15 percent between September and October, marking its lowest reading since June 2023. Additional negative headlines such as the Middle East conflict, the resolved leadership crisis in the U.S. House of Representatives, and the ongoing legal issues of former U.S. President Donald Trump have also contributed to the decrease in sentiment.
The confidence in government economic policies among consumers decreased by 8 percent, reaching its lowest reading since the peak of the debt ceiling crisis in May. Additionally, the autoworkers’ strike was mentioned spontaneously by 15 percent of consumers, up from 10 percent in September.
Concerns about inflation led to an 8-percent decline in consumers’ assessments of their personal finances in October. Around 47 percent of consumers reported that high prices are negatively impacting their living standards, a significant increase from 39 percent in September.
While lower income consumers saw minimal changes in their personal finances in recent months, middle- and higher-income consumers have experienced declines since August, partially influenced by the recent weakness in stock markets.
The anticipated business conditions for the next year plunged by 16 percent, while expectations regarding consumers’ personal finances in the year ahead fell by 8 percent. These decreases reflect ongoing concerns about inflation and uncertainty surrounding negative news both domestically and internationally, according to Joanne Hsu, the chief economist and director of the surveys.
“Although consumers recognize that inflation has slowed down since reaching its peak last summer, they cannot disregard the fact that their budgets remain stretched and their purchasing power has diminished,” Hsu explained.
The Surveys of Consumers is a rotating panel survey that utilizes a nationally representative sample, granting each household in the coterminous United States an equal probability of being selected. Telephone interviews are conducted throughout the month to gather data.
